Difference between Founder and Promoter

Key Difference: In business, a founder is basically someone who has founded the company. Hence, the founder is also basically an entrepreneur. A promoter, on the other hand, is someone who promotes the business. It is the promoter’s responsibility to get people to invest money into a corporation.

 The definition of a founder is pretty straight forward; it is a person who founds or establishes something. In business, a founder is basically someone who has founded the company. Hence, the founder is also basically an entrepreneur.

The founder is the one who comes up with the idea about what the company and business should be and/or what products or services should it be offering. The founder is also the one who may be responsible for coming up with a business model as well as acquiring human and other required resources. At the end of the day, the founder is basically the one who is fully responsible for the company’s success or failure.

After the company is set up, the founder can run it and act as the company’s CEO or Chairman, as well as sit on the company’s Board of Directors. The founder can instead also step down and let other people such as the appointed CEO and Chairman run the company. The founder can also sell the company, take their profit and walk away.

A promoter, on the other hand, is someone who promotes the business. It is the promoter’s responsibility to get people to invest money into a corporation. This role is very often important in the beginning stages of the business, as that is when the company needs the most investment.

In order to raise money, promoters often offer investment vehicles such as limited partnerships and direct investment activities in the company that they are promoting. This is usually because as the company and business is new it does not have access to traditional investment vehicles such as stocks and bonds.

The role of a promoter is often fulfilled by an investment banker, an underwriter, or a stock promoter. In order to raise money for the company’s initial investment, the promoter usually charges a fee. The promoter can also be paid in company stock or free entrance into the investment activity as compensation for their work. The role of a promoter may also be fulfilled by the founder himself, and this is where the confusion between founder and promoter occurs.

Comparison between Founder and Promoter:

 

Founder

Promoter

Can also be

Entrepreneur

Investment banker, an underwriter, or a stock promoter

Description

A Founder is someone who founds the company and/or business.

A promoter is a person who promotes the company tries to get other people to invest in it.

Responsibility

Fully responsible for the company’s success or failure.

Responsible for getting others to invest into the business venture.

Role

  • Comes up with the idea about what the company and business should be and/or what products or services should it be offering.
  • Responsible for coming up with a business model Responsible for acquiring human and other required resources.
  • Fully responsible for the company’s success or failure.
  •  
  • Promote the company
  • Get people to invest money into a corporation
  • Offer investment vehicles such as limited partnerships and direct investment activities in exchange for investment
  • Must not make any secret profit out of the promotion of the company
  • Must make full disclosure to the company of all relevant facts

Image Courtesy: landinglaunch.info, resources.workable.com

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